Lack of Money Is the Root of All Evil

While most of the media are fixed on the movement of stage props on reviewing stands in Pyongyang, mine remains in North Korea’s outer provinces, markets, and ratlines across the Yalu. These, after all, are the things that will drive real change in North Korea. A new report from the Korea Times suggests that increasingly, money smuggling has become an engine of regeneration for North Korea’s free markets:

It is common for North Korean defectors here to send money to their poverty-stricken family remaining in the communist regime. The widespread, but little-known practice should be legalized, a civic group and a lawmaker of the main opposition Democratic Party (DP) said Monday.

“Of some 20,000 North Koreans who have defected to South Korea, nearly all of the economically-active ones send money home,” Shin Mi-nyeo, head of the Organization for One Korea (TOOK), told The Korea Times. TOOK is a civic group dedicated to supporting new defectors since 1988. She claimed that many of those with even little income, such as elderly women, also regularly send money to their family and relatives that they left behind in the North, even if they have to borrow money from others.

“They can’t help but send money home as they know how bad the economic situation is there and the sufferings the ones they left have to go through,” Shin said.

Shockingly, I agree with Democratic Party lawmaker Won Hye-Young, who wants to legalize this practice, but the agreement ends at that basic point. Predictably for a party that acts more like a North Korean front each year, Won wants to do this in a way that will ensure that 100% of the proceeds are diverted from the defectors’ starving families and into Kim Jong Eun’s ChocoPie fund:

“The United Nations and other international bodies should address the issue and help North Korean defectors remit money to their family in the North through legal channels,” Won said.

How typical. Won really means to send the money through official North Korean channels, along the lines of the remittances from Japanese-Koreans via Chosen Soren. But this would guarantee that the intended recipients would never see won one. What the regime didn’t confiscate out of greed, it would confiscate out of spite. The returned Japanese-Koreans who received remittances from Japan have been objects of envy and suspicion, to be sure, but to the North Korean deiocracy, defectors to South Korea are capital criminals and their families are accessories to heresy. The last thing it’s going to do is send them money and incentivize more defections. The delivery of money though smugglers may be exploitive, but it doesn’t raise those concerns to nearly the same extent. If money smugglers demand a 30-50% cut — understandable given the obvious risks they’re taking — that’s still 50-70% better than what the families would get through “legal channels.” And over time, as defectors learn which smugglers they can trust, the market will reduce those transaction costs and risks.

I depart here from my usual default position of keeping foreign money out of North Korea, but the objective of that position was never to keep ordinary North Koreans poor, hungry, and ignorant. Rather, the objective is to damage the regime’s capacity to keep ordinary North Koreans poor, hungry, and ignorant. Our policy objective for North Korea should be to break down the isolation and dependency of its people, even as we constrict the regime and strain its capacity to oppress. Recently, I’ve given much thought to how we can catalyze this process. Because the market is still the only alternative institution that can challenge the North Korean regime, and because markets can’t exist without a medium of exchange, my thoughts always return to money as the solution. Without it, there is famine, dependency, and ignorance. With it, there is what passes for freedom in North Korea — a full belly, a warm coat, and a radio. More than anywhere else in the world today, lack of money is the root of all evil in North Korea. The regime must agree with me, or it would not have launched its Great Confiscation. But the Great Confiscation failed. Yes, there is still hunger and starvation as a result, but the markets are back, the people are more embittered than ever, and North Koreans don’t even want to hold their own country’s currency anymore.

With North Korea’s rife corruption, there is little that can’t be bought for enough money, and although the present priority has to be using that money to draw food and medicine into the country, a well-developed free market will eventually supply the basic needs of the people, break their dependency on the state, and supply the basic tools that an underground will need to challenge the state directly. Without the development and coordination of some sort of North Korean underground, the people can only resist the regime with sporadic and futile outbursts. As they have before, the North Korean people are showing us the next step in this Hegelian process — though the smuggling of currency from South Korea’s 20,000-strong refugee population back to their North Korean relatives.

I can see no better way to subvert the regime than to replace dependency on the state with dependency on economically independent rejectionists in South Korea. If the medium is foreign currency, so much the better. To the extent it operates beyond the reach of the kleptocratic state’s diversion, money smuggling may also be a more efficient way to feed North Koreans than international aid.